filing 1096 T

[tru2it]

My employer paid my tuition via credit card payments directly to the school. There is no contract in place or reimbursement plan. He plans to file this on his taxes in some capacity, and I imagine as a gift or charitable donation. The amount was over 17,000.00. Should I report this and accept the education tax credits?

[Vanessa A]

You cannot make a charitable donation to another person, only to a qualified charitable organization.  If it is your employer, it would not be a gift.  

Your employer should include the amount that is over $5,250 in your box 1 wages on your W2 as taxable income.  If this is included in your income, then yes, you can take an education credit for the amount you are considered to have paid. The first $5,250 would not be able to count towards the education credit as you are not taxed on that income so you would be getting a double benefit. 

[tru2it]

Thank you for the quick response! So if this was not included on my W2 , what is the best way to proceed? 

[MaryK4]

You really need to get clarification from your employer- since you did not pay the tuition, if he receives any tax benefits for all or part of it, you cannot use the same tuition to claim the Education Credits.  Payments made on your behalf are considered gifts to the student, but there can be no double tax benefit. @tru2it 

[Hal_Al]

Q. Should I claim  the education tax credit?

A.  No. At this point, the education was paid for by tax free money, so you cannot claim a 2nd tax benefit (the education credit). It's not clear if the money is an employee benefit, a scholarship, a gift or under the table money. 

Q. Should I report the $17,000 as income (and then claim a tax credit)?

A.   You may want to discuss that with your employer.  It gets messy.  The $17,000 should have been included on your W-2 (or at least, most of it).  There is a provision for employers to provide up to $5250 of educational assistance, tax free.  But IRS rules must be followed. 

An employer cannot give tax free gifts to employees.  This sounds like a one off deal for you, as opposed to a company tuition reimbursement plan.

The  proper way your employer can deduct this ("He plans to file this on his taxes in some capacity") is as employee compensation or benefits.  He should be adding it to your W-2. 

There are other ways for you to report it, but none of them are as correct as it being on your W-2.  Reply back if you need more info.